Policy Study

Simplify, Simplify

Alternative Environmental Permitting at the State Level

Executive Summary

Environmental regulation has suffered from a one-size-fits-all mentality, with prescriptive regulations applied across industries. Traditional environmental regulations have two central features. First, they require regulated industries to comply with one-size-fits-all prescriptions aimed at reducing pollution. Second, they require that industries obtain permits demonstrating compliance at each emission source. But permits are no guarantee of actual environmental improvement, for they use a proxy goal rather than tangible environmental improvements as a barometer of success.

States are now exploring alternatives to traditional, often cumbersome permitting practices that include:

  • One-stop permitting: replaces different permits for different emission and emission sources;
  • Facility-wide permits: permits apply to an entire facility, not to each piece of equipment;
  • Industry-wide standards: similar processes across facilities allow for a bar to be set for the entire industry; and
  • Permit streamlining: the entire permit process is simplified and oriented towards customer service.

Each of these reforms has been instituted in an attempt to circumvent some of the perverse incentives that ordinary command-and-control permits can create, such as high costs, bureaucratic inertia, industry resistance, and stifling of innovation.

Specific application of these reforms has come in many states:

  • Mississippi, after previous failed attempts, engineered a “one-stop” permit to facilitate compliance;
  • Massachusetts has adopted industry-wide performance standards through their innovative Environmental Results Program;
  • New Jersey has experimented with a facility-wide permit, regulating on the basis of what is produced, rather than how; and
  • Minnesota’s Pollution Control Agency and the Oklahoma Department of Environmental Quality have streamlined their permit processes, fostering a more-cooperative relationship with industry.

While all of these reforms share the goal of easing administrative burdens on the regulators and the regulated, more importantly they seek a way to provide a greater level of environmental protection with less government interference. By utilizing more-efficient institutions and structuring incentives in a manner to involve the private sector, architects of alternative permit schemes explore better ways to protect the environment.

In order to implement successful innovations in permitting, states should follow these guidelines:

  • Insure involvement by affected constituents: By bringing all parties to the table early, and letting them voice their demands, an atmosphere of inclusion is created.
  • Balance goals: Involving all parties does not mean that every interested member of the community can have the opportunity to railroad a project.
  • Reorganize environmental departments: This may help circumvent some of the problems that entrenched interests can cause. Minnesota’s restructuring towards a geographic-based unit is a good example of a more efficacious, holistic approach. Avoiding the regulatory shell game means moving more efforts into multimedia programs.
  • Involve the EPA: EPA will probably become involved at some stage of the innovation process. Some states recommend bringing the EPA on board as quickly as possible, while others recommended a laterstage involvement.

Once these guidelines have been adhered to, the following procedural steps will help facilitate innovation:

  • A “grace period” during implementation: A form of permit-enforcement immunity, this period should allow companies that wish to improve their processes some leeway and freedom from prosecution for mere procedural (rather than criminal) violations.
  • Concurrent compliance assistance: Many businesses are violating emissions caps or standards simply because they don’t know what the standards are. A form of assistance, coupled with temporary liability immunity for noncriminal violations, will help businesses understand their impact on the environment and allow them to change.
  • Intensive background knowledge: Permit innovators need to know the industries and the companies they are addressing. Facility-wide permits and industry standards work because of similar processes that lend themselves to simplification.
  • Knowledge of the political climate: Some states are simply unable to implement this flexibility because of the prevailing political mood at the time.

Following this checklist will not guarantee success of an innovative program, but these criteria will lessen the chances of failure. For, as these states have shown, innovation is experimentation.